Hub Blogs

Hub Blogs contains fresh contributions written by Financial Independence Hub staff or contributors that have not appeared elsewhere first, or have been modified or customized for the Hub by the original blogger. In contrast, Top Blogs shows links to the best external financial blogs around the world.

Are mutual funds headed for extinction?

Posted By Financial Independence Hub | September 8, 2016

James Gauthier, JustWealth

By James Gauthier, CIO, JustWealth

Special to the Financial Independence Hub

The advent of the mutual fund was one of the greatest innovations in the field of finance. Mutual funds created a practical means for common folks to invest in the markets which used to be only accessible by the wealthy.

The mechanics of how mutual funds operate have not changed much in the many decades since they have been around. Simply put, a group of investors pool their money together and form a unit trust where all investors get a pro rata ownership of what they contributed to the pool in the form of units (or shares). The pool is then used to buy a number of underlying investments such as stocks or bonds.

At the end of each day, all investments in the trust are priced and a Net Asset Value (or NAV) is determined by dividing the total value of the trust investments by the units outstanding. Investors who want to purchase shares of the trust may do so based on the NAV established at the end of each day.

Mutual funds have been available to Canadians for over 80 years, and now number more than 15,000 worth well over $1 trillion. Companies or individuals who sell mutual funds like to promote the benefits of mutual funds: Continue Reading…

Early retirement? Half of us in trouble if we miss a single paycheque

Posted By Jonathan Chevreau | September 7, 2016

Patrick_Mar05web — CPA CEO Patrick Culhane

As my Financial Post blog today summarizes, far from being confident about a comfortable or even early retirement, almost half of working Canadians (48%) say it would be hard to make ends meet if their paycheque were delayed even a single week. Click on the highlighted headline for full story: Nearly half of Canadians are living paycheque to paycheque — and that has big consequences for retirement security.

Almost one in four (24%) don’t think they could come up with $2,000 if an emergency arose in the next month, according to the Canadian Payroll Association (CPA)’s eighth annual Research Survey of Employed Canadians, which is being made public on Wednesday.

The survey of 5,600 employees across Canada (conducted by Framework Partners between June 27 and Aug 5) found 40% spend all or more than their net pay, while 47% are able to save only 5% or less of earnings. Little wonder that 75% have saved a quarter or less of their retirement goal. Even among those aged 50 or more, a “disturbing” 47% are still less than a quarter of the way to their retirement savings goal.

Half think they’ll need $1 million to retire, and will need till 62 to do so

Employee Savings Plans: why say no to free money from your employer?

Posted By Financial Independence Hub | September 3, 2016

The September long weekend is upon us and, for many, it’s the last chance to spend some quality family time before the transition back to school and work.

The post-Labour Day shift into a more productive mindset offers a good time to review your Employee Savings Plan (ESP), a benefit that can be a great way to save money but can also add some risks.

An ESP is a program set up by an employer that allows employees to contribute a portion of their income into an investment the employer has provided. In some cases, the employer may also match all or a portion of the contribution made by the employee.

Benefits: free money!

By participating in your ESP you’re basically getting free money. Whether an employer matches part or all of your contributions, you will be hard pressed to find any other investment out there that provides immediate returns. Say, for example, that your employer will match 50% of your contributions, up to 6% of your salary (a typical scenario). All growth and other earnings aside, your investment immediately grows by 50% and your 6% turns to 9%.

Investing isn’t about hitting home runs but staying out of trouble

Posted By Graham Bodel | September 1, 2016

People are often surprised when we say that successful investing does not mean you have to “beat the market.” Instead, successful investing is simply that which allows you to meet your financial goals.

Trying to hit “home runs” by picking hot stocks before they jump or timing market swings are activities more aligned with speculating than investing and may actually decrease your chances of meeting your goals. Ultimately, success is less about swinging for the fences and more about staying out of trouble.

Unfortunately, trouble can manifest itself in many ways. The most common troubles that can trip investors up are:

High and hidden fees

Canadian mutual funds have among the highest fees in the world – high fees detract from investment performance and over a long period of time can significantly erode your savings nest egg.

Lack of diversification

How to maximize Credit Card loyalty rewards programs

Posted By Financial Independence Hub | August 31, 2016

By Frank Psoras, TD Canada Trust

Special to the Financial Independence Hub

Credit cards can offer many benefits to achieve your financial goals. And with most credit cards today, the more you swipe, insert or tap, the more opportunities you have to earn and redeem loyalty rewards.

According to a recent TD survey, nearly three-quarters (72 per cent) of Canadian adults carry at least one card that offers a rewards program, with most cardholders (82 per cent) saying it’s one of the top factors when choosing a credit card.

North Americans are among the most rewards-savvy consumers in the world; they’re always looking for better ways to get the most from their rewards programs to reach their goals faster. That is why it’s no surprise our survey also shows that almost half (49 per cent) of Canadians are willing to change where they shop to earn and redeem points faster. But remember to pay your balance on time and in full to avoid incurring interest charges on purchases. Continue Reading…

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